Shippers adapt to slowing demand for drilling equipment

The Breakbulk Americas conference, held at the George R. Brown center, wrapped up Thursday.

Photo: Steve Gonzales, Staff

Companies at the Breakbulk Americas conference in downtown Houston this week report they are feeling the effects of declines in demand for oil rig equipment.

Breakbulk shippers help move much of the heavy equipment used to drill, and many of the companies attending the conference specialize in making cranes and forklifts, custom packing equipment, coordinating logistics, stevedoring and operating ships.

As oil and gas companies slash project budgets, these companies have less to move.

"Volumes overall are down with our customers," said Kevin Sharp, country sales manager for Panalpina's energy solutions group, a logistics company. The company has offices all over the world, but in Houston, where it has about 300 employees, 95 percent of its business is energy-related, Sharp said.

"We are trying to diversify what our portfolio is in Houston, but it's a struggle because everyone else is as well," he said.

The company is looking to retail, food and electronics for new business. They've also had interest from customers wanting to bring more imports to Houston once the Panama Canal expansion is complete. That's scheduled for next year.

Some customers have turned to Panalpina for help in increasing their efficiency as they look to cut costs, Sharp said. Now Panalpina is working on supply chain efficiency for some clients for whom it previously only provided transportation logistics.

Liquefied natural gas, refinery and petrochemical projects give these companies some relief, with projects continuing over the next few years.

"These projects are still on the books and still taking place," said Steve Drugan, regional vice president for logistics company Deugro. He expects there will be business in that realm for the next three to five years.

Ed Davidson, vice president of operations for Argosy, a logistics company and ship operator, said the company has growing demand for its barges to move equipment for such projects within the Houston area and along the Gulf Intracoastal Waterway. But for its oceangoing ships, "we've seen some things postponed."

"Definitely things have slowed down," he said.

The low cost of fuel makes it easier to manage costs, said Lucas Strom, with AAL Shipping. Into 2017, he said, the company has business in LNG and refining projects that were financed two years ago.

"Those projects are still sustaining the business currently," he said. But after that, he added, "We feel that there's going to be a gap."